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Musings About a Gold Backed Treasury Dollar

Updated on May 21, 2020
Anne Matthews profile image

Anne has a bachelor degree in Behavioral Science and has worked in Human Services as an Outreach Worker.

Would a Gold Backed Treasury Note be Better Than Fiat Currency?

Many different sources have suggested that the President of the United States is going to release a new Treasury Dollar that is backed by gold, and that this will be a part of a global currency reset in which other countries will also release gold-backed currency if it is not already gold -backed. These various sources announce this looming possibility with a lot of fanfare and support and talk with great disdain about "fiat paper notes that are not backed by anything." Well, I question whether this is such a great idea and whether it is true that "fiat currency" has no value.

For me the first question is, "How much gold does America have?" Does America have a lot of gold, or a little gold, or no gold? Is the gold that we hold ours, or are we holding it for some other country? Is it solid gold or bars of tungsten covered in gold plate? Is it in Fort Knox? Is anything in Fort Knox? The point is, if we are going to go onto a gold standard then we need, as a country, to have a lot of gold. We need to have a lot of gold because the American Dollar is used by other countries for trade and people all over the world invest in it with the FOREX system. The American Dollar, which is currently the Federal Reserve Dollar, is used all over the world for trade. If we go to a United States Treasury Dollar that is tied to gold, there needs to be enough gold to cover the world population of over seven billion people, and expanding into greater numbers, having a significant number of dollars over their lifetimes.

However, owning gold poses some problems. Supposing you or I decide to cash in a sum of money, say $100,000, for gold: what are we going to do with that gold? Are we going to have it in a safe in our house, or in a deposit box in a bank, or is the bank going to move it to a central bank, or will it go to a fort to be guarded by the military? Then will our country be invaded by another country in order to seize our gold? Will there be an increase in bank robberies and home invasions by robbers looking for gold?

What is our general human obsession with gold all about? We give it a huge amount of value and yet what is its intrinsic value? Can you eat it, or make useful items from it, if there was a breakdown of society? It is useful for jewelry and electronics. Otherwise it is a soft metal that does not rust or corrode. It conducts electricity very well. What financiers will tell you is that it holds its value well and makes a good investment, as its value goes up over time, keeping pace with inflation. Of course, if you buy gold, do they actually give you the gold, or a piece of paper saying that you own so much gold? Somehow, you have ended up with worthless paper again.

There was a time before computers and the internet where gold coins met the necessary criteria to be used as currency: a rare substance that not everyone had access to; fabricated into measurable units; long lasting and not subject to decay or corrosion. There is no necessity for currency to have any intrinsic value, which is why gold does not. Currency is a medium for trade of goods and services. The important part is the trading of goods and services. Goods and services are the true wealth of a nation. When you think about it "goods' can take the form of natural wealth within the boundaries of a geographical location such as deposits of oil, gold, silver, other precious metals, diamonds and other jewels and crystals, and rare earth minerals, and coal. A country can be very rich in resources but not have the finances to mine these resources. Then more accessible resources can be farmland, forests, and rivers which provide crops, meat, timber, fish, and electricity. Then, there are manufactured goods such as clothes, food, furniture, medical supplies and appliances. All of this wealth is created by human labor and ingenuity. It is the thinking, creating, use of skills, planning, and hard work, that creates wealth. The wealth of a country lies in the ingenuity and inventiveness of its people. So what governments world-wide need to invest in is their people, because every single one is valuable from a manual laborer to a rocket scientist. What goes wrong with countries is when a small group of rulers takes all of the wealth for themselves and does not invest in their nation.

Cut and paste links to my other articles:

Thoughts on if Printing Dollars Will Cause Hyperinflation

Reflections on Where the Stimulus Money is Coming From:


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